Changes to VAT zero rating imminent
HMRC has announced an extension to the materials qualifying for the VAT zero rate from 1 February 2024. What’s the full story?
The government often uses tax policy to encourage the use of energy efficient/otherwise environmentally friendly technologies. Currently, the purchase of certain energy-saving materials (ESM) is zero rated for VAT until 31 March 2027, at which point it is due to revert to the reduced VAT rate of 5%. Following a consultation, the list of materials qualifying for the zero rate has been extended to include the following from 1 February 2024:
- Electrical battery storage that is retrofitted to a qualifying ESM (currently this is only available if the battery is fitted at the same time as the ESM).
- Installation of electrical battery storage as a standalone technology connected to the grid.
- Water-source heat pumps; and
- Diverters retrofitted to ESMs such as solar panels and wind turbines.
The zero rate will also apply to the installation of some groundworks that are required for the installation of heat pumps. These works will be specifically defined in the legislation.
Further information on the outcome of the consultation can be found here.
Related Topics
-
Who can't yet sign up for MTD IT?
Making Tax Digital for Income Tax (MTD IT) becomes mandatory from April 2026 for sole traders and landlords with qualifying income over £50,000. However, HMRC’s current guidance makes clear that not everyone can sign up yet. If you are preparing early, are you actually eligible?
-
MONTHLY FOCUS - PROFIT EXTRACTION PLANNING AHEAD OF 5 APRIL 2026
The end of the 2025/26 tax year is fast approaching. In this Monthly Focus we look at ways to get money out of your company tax efficiently, and consider whether limited is still the way to go for your business.
-
HMRC updates advisory fuel rates from 1 March 2026
HMRC has published the latest advisory fuel and electric rates (AFRs) for company cars, effective from 1 March 2026. Several rates have changed since the previous quarter. What should employers be aware of?
This website uses both its own and third-party cookies to analyze our services and navigation on our website in order to improve its contents (analytical purposes: measure visits and sources of web traffic). The legal basis is the consent of the user, except in the case of basic cookies, which are essential to navigate this website.